U.S. stocks jumped higher Friday morning while oil prices plunged, after President Donald Trump signaled that the Strait of Hormuz would remain open to global shipping despite ongoing tensions with Iran. The Dow Jones Industrial Average rose 680.44 points to 49,259.2, while the S&P 500 climbed to 7,096.18 and the Nasdaq Composite gained to 24,337.8.
Crude oil led the move, tumbling 9.54% to $82.47 a barrel, as traders rapidly unwound geopolitical risk premiums tied to fears of supply disruptions in the Middle East. The selloff followed a series of posts from Trump clarifying earlier remarks about the “Strait of Iran,” stating instead that the Strait of Hormuz is “completely open and ready for business and full passage,” even as a targeted naval blockade remains in place against Iran.
“The Strait of Hormuz is completely open and ready for business,” Trump wrote, adding that restrictions would apply only to Iran until negotiations are finalized. He said the process “should go very quickly,” suggesting a near-term resolution to the standoff.
Gold prices rose 1.13% to $4,862.50, reflecting residual caution among investors despite improving sentiment. The VIX volatility index fell 2.51% to 17.49, signaling reduced near-term hedging demand as markets interpreted the developments as stabilizing for global trade flows.
Still, underlying financial system risks remain a concern. Torsten Slok, chief economist at Apollo Global Management, warned Friday that hedge fund exposure to U.S. Treasuries has reached unprecedented levels.
Hedge funds now hold roughly 8% of Treasuries, financed by more than $6 trillion in repo and brokerage borrowing. Slok cautioned that any forced deleveraging could “send shockwaves through global fixed income markets,” citing analysis from the Office of Financial Research.
Looking ahead, markets will focus on further developments in U.S.-Iran negotiations, as well as potential spillover effects into Treasury markets, where elevated leverage could amplify volatility if conditions tighten.
